Hi, I’m new to the board. I recently received an offer to lease my mineral rights for oil and gas. The lease seems to be word for word the same as other leases I’ve seen and I have a sight draft for the bonus, trouble is…I cannot find anything out about ANY of the landmen, nor
the company that wants to lease the property, not even the references they gave me. None of the landmen belong to any of the major associations and the no one has heard of the company, it isn’t listed in the local telephone book- zippo.
So, from greed alone I don’t want to pass up the deal if it is valid but on the other hand I’ve heard there are a fair number of scams, either someone that is going to try to take away the rights themselves or environmental groups that want to try to tie up the land, etc. Is there any way to research or check out landmen? If any of you have run into this type of thing- what exactly is the scam? Thanks for any help.
I am not aware of any scams, so I can’t help you out there. What is the name of the company that the landman represents? It is not as important to check out the landman, but you should gather information regarding the lessee.
Also, what state are the mineral rights located in?
JC - Landman
Well I sort of hate to drop names because I don’t want to bad mouth anyone so please realize that these people are probably completely legitimate- as I said my problem is I cannot find anything on them. Company: Upstream Innovations, Inc, Parker, CO. The secretary of State has them as a corporation and in good standing. The tax assessor in Douglas County, CO has the Corporation’s Address as a rented Residential Dwelling. Company agent: Jason Simmons. Landmen representing the Company: Cramer Hickey. There is also a Mark Matthews. I asked for references: I was given: LandPro Resources (AKA LandPro Energy) in Aurora. Corporate Headquarters appears to be in a shopping mall. Their landmen: Jeff Fike and Jim Gulick. I checked with AAPL and they never heard of any of the companies or landmen. I checked the area telephone directories- no telephone numbers for anything. One issue I have is I own a 50% interest and possibly 100% if I can clear up some legal matters but they sent me a lease for the 100% andthe lease has the standard clause of the lessor defending title, etc. I don’t want to get involved with some ploy to take away my interest or to tie up the land and take it off the market. As I said, all these people are probably fine folks- please don’t infer anything else but I simply cannot find any information on them. I have other mineral interests elsewhere and in that case the landman was a member of AAPL and the company checked out fine. ALL HELP APPRECIATED.
David,
Upstream Innovations probably isn’t the operator, they probably buy leases and assign them to the Exploration company. I would ask the landman who their client is (or who is interested in drilling the well). You should be able to gather some information from their response.
There are lots of provision you can make to the lease to protect your interest, including; no warranty clause (expressed or implied), surface-use provision, pugh clause (horizontal and vertical). I wouldn’t recommend ‘jumping’ at the first offer, counter-offer and see how serious this group is.
If you don’t mind, please post the terms of the proposal.
It is $150 per acre and a 1/6th Royalty. I’ve heard the prices go higher so it isn’t the best offer. The landman already told me that Upstream is working for a larger client but said he couldn’t reveal the name. I am trying to think of how I might be put in a bad position if I sign and it is a scam. All I can think of is the lease says I am supposed to warrant or defend the title and as I said for 50% I know I have good title but on the other 50% I need to file papers, etc and get some sort of court decision, “quiet title”- or whatever it is called- I am just not sure how to go about that. So worry number one is I sign and then the outfit tells me I’ll have to pay thousands in legal fees defending the title or I can just give them my rights and they’ll forget the legal bit. A fellow at AAPL told me I ought to just cross out that part of the lease because the oil company has lawyers to check it out anyway and they approached me- I didn’t approach them. The other worry is if the outfit leaves a lot of equipment or tears the surface up and then I have to pay the clean up costs- from what I can tell on the lease the clean up is supposed to be their responsibility but what if they refuse to do it?. Finally, they want my SS# for tax purposes so I am signing something with my signature, giving out my SS#, and putting the sight draft through my bank- all to people I don’t know and who only call me on cell phones and live in motels or rented houses- if they all vanish I have no way to know where to find them- I have no way to know if the names they have given me are even their actual names. It seems like a good set up for identity theft. As I said, on another property I was approached by a landman who had a regular ground line, was a long standing member of the AAPL and told me the company which I then checked out and verified. In any event, at this point, I am of a frame of mind on just passing up the deal even though the bonus is a good sum and I sure would like it. I cannot understand why they cannot supply me with some references, etc.
David,
If I was in your position, I would wait for a competing offers (or seek other offers). If possible, visit the county clerk of court’s office in the county which the mineral rights are located and search for recent leases. Try and contact the other companies buying leases and request an offer. Also search upstream innovations for activity. TIME IS ON YOUR SIDE IN MOST CASES.
I would add a provision that reads similar to; This Oil, Gas & Mineral Lease is made without any warranty of title whatsoever, either expressed or implied and literally scratch out their warranty language.
You can also add a no-surface use provision that would prohibit surface operations under the terms of the lease. The operating company would contact you to negotiate a separate agreement for a well site/roads/pipelines.
You can also add an indemnification clause that releases you from all liability from operations performed under the terms of your lease.
The SS# is for identification and tax purposes. You don’t have to provide at the time the lease is signed.
Some companies buy ‘standard’ leases at a discount rate and sell them to an operating company at a profit and reserve an overriding royalty interest, meaning; They grant you a 1/6th royalty and sell to operating company and reserve a 5% royalty. This can by why they will not tell you their client, they don’t have one. They may be trying to buy leases ‘on the cheap’ and then they will shop around to different exploration companies for a profit (obviously, I am speculating here, just trying to give you a few things to think about).
I doubt this is a scam to steal your identity, but refuse to provide your SS# and see if they withdraw their offer. Or, request to be paid by certified funds…
It sounds like to need a good oil and gas attorney to protect your interest.
I am not an attorney and I am not attempting to provide legal advice here. My ‘tips’ are free so take it for what it’s worth.
Good Luck,
JC
Thanks JC, I’m going to be back at the land in a few months anyhow so I think I’ll just check out the activity at the clerk’s office myself. I appreciate your help.
I’d like to know the answer to this myself. Will you post something if you find out? Pam Cooner
I haven’t found anything yet. Have you also been contacted by these people? As I said to start, all may be fine, I understand that a new outfit isn’t going to have a track record but I asked for references several times and was given names, etc that did NOT check out in the respect that no one had ever heard of any of them. The main thing- to me at least- is let’s say they all disappear- all I have is rental residential houses and cell phone numbers. Well, I’m going to be back in WY in a couple of months so I’m going to spend a day or two at the registry to figure out what is going on in the area. Until then I’m not signing anything.
Pam Cooner said:
I’d like to know the answer to this myself. Will you post something if you find out?
Pam Cooner
Since my name is being mentioned in this blog (Mark Matthews) I felt that who ever accesses this blog should have the ability to verify information contained within. I work for Upstream Innovations as a landman, working in the Douglas, WY area (Converse County) acquiring mineral leases. Upstream Innovations is directly affiliated with a “Top 5” oil company, focused on production. We are not accumulating mineral rights for re-sale.
Hi Mark: I was wondering if I would get a response from anyone I had mentioned. I feel a whole lot better already that I have. Please understand my caution but you do hear a lot of horror stories (like environmental groups) and the only other two times I went through any deal like this was with Citgo and Chesapeake and both were easy to check out. In any event I just got in and it is late. I’ll try to call you tomorrow and discuss all the concerns I posted above and how we can handle them.
Dave
Update: Just to let anyone know who may be interested, I called Mark today and had a long talk and they check out fine, he put me in touch with a good oil and gas attorney. They are a legitimate outfit.
Where do we locate an oil and gas attorney who is good and fairly reasonable.
Frank peasley Douglas Wyoming 307 358 4545. Tell him you were referee by Mark Matthews.
Debbie,
I made mistake on the phone number for Frank Peasley in Douglas Wyoming it is 307-358-4505.
Thanks!
Mark Matthews
Hi, send me an email at corie@moyelawfirm.com. I think I might know an attorney in Tallahassee, Florida that can help you with this situation. Thanks.
Just two notes on this… First, Upstream Innovations, Inc. was one of the lowest offers I have received thus far, wait for others would be my recommendation. Second, the landman just gave you a reference for an attorney, who’s side do you think the attorney is most likely to be on?
David Scott said:
Well I sort of hate to drop names because I don’t want to bad mouth anyone so please realize that these people are probably completely legitimate- as I said my problem is I cannot find anything on them.
Company: Upstream Innovations, Inc, Parker, CO. The secretary of State has them as a corporation and in good standing. The tax assessor in Douglas County, CO has the Corporation’s Address as a rented Residential Dwelling.
Company agent: Jason Simmons.
Landmen representing the Company: Cramer Hickey. There is also a Mark Matthews.
I asked for references: I was given: LandPro Resources (AKA LandPro Energy) in Aurora. Corporate Headquarters appears to be in a shopping mall. Their landmen: Jeff Fike and Jim Gulick. I checked with AAPL and they never heard of any of the companies or landmen. I checked the area telephone directories- no telephone numbers for anything. One issue I have is I own a 50% interest and possibly 100% if I can clear up some legal matters but they sent me a lease for the 100% andthe lease has the standard clause of the lessor defending title, etc. I don’t want to get involved with some ploy to take away my interest or to tie up the land and take it off the market. As I said, all these people are probably fine folks- please don’t infer anything else but I simply cannot find any information on them. I have other mineral interests elsewhere and in that case the landman was a member of AAPL and the company checked out fine. ALL HELP APPRECIATED.
David - I was curious what ever came from your situation - I found your blog and its almost word for word - questions I have. Thanks David
TC FARBER said:
David Scott said:Well I sort of hate to drop names because I don’t want to bad mouth anyone so please realize that these people are probably completely legitimate- as I said my problem is I cannot find anything on them.
Company: Upstream Innovations, Inc, Parker, CO. The secretary of State has them as a corporation and in good standing. The tax assessor in Douglas County, CO has the Corporation’s Address as a rented Residential Dwelling.
Company agent: Jason Simmons.
Landmen representing the Company: Cramer Hickey. There is also a Mark Matthews.
I asked for references: I was given: LandPro Resources (AKA LandPro Energy) in Aurora. Corporate Headquarters appears to be in a shopping mall. Their landmen: Jeff Fike and Jim Gulick. I checked with AAPL and they never heard of any of the companies or landmen. I checked the area telephone directories- no telephone numbers for anything. One issue I have is I own a 50% interest and possibly 100% if I can clear up some legal matters but they sent me a lease for the 100% andthe lease has the standard clause of the lessor defending title, etc. I don’t want to get involved with some ploy to take away my interest or to tie up the land and take it off the market. As I said, all these people are probably fine folks- please don’t infer anything else but I simply cannot find any information on them. I have other mineral interests elsewhere and in that case the landman was a member of AAPL and the company checked out fine. ALL HELP APPRECIATED.
Well, the outfit is legitimate but it is taking forever and a day to get paid on the sight draft, which brings up an interesting question to anyone in the know. If you have another outfit that also wants to lease the land how long do you have to wait on the first deal before you can drop it and go for the second deal? I don’t want to sign a lease with another outfit if I’m still somehow obligated to the first outfit.
And…are there any special tax break for the bonus payment? Just wondering…